Mike Huckabee on Tax Reform

Former Republican AR Governor

Higher tax brackets punish people for more work

I support the FairTax because it would empower people at the bottom of the economy by no longer punishing them for their work. If a guy works 16 hours, he doesn't get a double paycheck because he's going to be bumped up into
a new tax bracket, and the government will get more of his second shift than he will. So, we've actually punished him for being industrious.

22% of cost of goods is embedded taxes; take that tax out

Q: Americans, under your plan, would pay a tax on every single thing that they purchase. Given that consumer spending accounts for 2/3 of GDP, wouldn't your tax plan would actually discourage spending, thereby slowing our economy?

HUCKABEE: Well, do
you know an American that will just stop spending? I don't. Look, Americans will go to the marketplace with more money they've ever had. For the first time they'll be having their whole paycheck. You see, most people don't understand that when you buy
something that is made in America, 22% of the cost of it is the embedded tax they never even know they paid. It's why China has beaten the daylights out of us: they can build stuff that we can't because they're not taxing it; they don't tax capital
and labor and we do. They bring something over here, it's automatically cheaper even without the regulatory environment because they're not embedding the taxes; we are. Take the embedded taxes out.

Get rid of all taxes on people who produce

Q You have said that you are bothered by the fact that hedge fund managers pay such a low tax rate and make 2,500 times what people who work for them make. Do you agree with what Donald Trump and Governor Bush have proposed, raising their tax rates?

HUCKABEE: I have a different idea. I think we ought to get rid of all the taxes on people who produce. Why should we penalize productivity? And it's why I'm an unabashed supporter of the "fair tax," which would be a tax on our consumption, rather than a
tax on our productivity. In other words, you're not going to tax anybody for what they earn, whether it's worker whose working by the hour or whether it's a hedge fund manager. If they can produce something and bring capital and labor to create jobs,
we need some jobs. And I think the "fair tax" makes more sense. What I'd love to see us do by no longer penalizing the people who are out there working because they are taking a gut punch right now.

Tax system can't be fixed, not even with Duct Tape & WD-40

The tax system in our nation is broken. Badly broken. Worse than that, it's beyond repair. In the South we often say, "If it can't be fixed with duct tape and WD-40, it can't be fixed." Well our tax system can't be fixed--not even with duct tape and
WD-40. We need a total overhaul.

The fundamental flaw in the current tax system is that it penalizes work and productivity. Here's a little common sense: we get more of what we reward and we get less of what we penalize. Under the
FairTax, no one would be taxed--that is, penalized--for their work, investments, savings, or earnings. The tax rate on capital gains would be zero. There would be no paycheck deductions.

The authors of the FairTax estimate that under the
FairTax, these economic benefits would occur: Gross Domestic Product would increase by 10.5%. Capital stock would increase by 42%. Labor supply would increase by 4%. Output would increase by 12%. Real wages would increase by 8%.

Tax system punishes people for working & productivity

Q: Your campaign chairman said, “At the end of the day, we’ll do whatever we can to help John McCain in the fall. If he wins, great. If not, the game starts all over again. It may be open again in four years, and Mike is 51. He’s got a long way to go
before his political career is over.” Are you thinking ahead to 2012 or beyond?

A: No, I’m really not thinking about what’s going to happen in four, eight or years beyond. I’m thinking about what’s going to happen to this country. And I’m very concerne
about it. I’m concerned that we are going to see our taxes go up. That will kill small business. It will kill free enterprise. It will create even more of a trade imbalance. Look, we need some big ideas when it comes to the economy. There are a lot of
Americans struggling, and they are not going to get better, with the kind of tax system that punishes people for working and punishes them for their productivity. That’s got to stop, or we are going to just send this nation’s economy into a spiral.

Signed tax pledge to not raise marginal tax rates

Q: When you announced for president, I asked if would you sign a pledge promising not to raise taxes. And you answered, “I think it’s a very dangerous position to make pledges that are outside the most important pledge you make, and that is the oath you
take to uphold the Constitution and protect the people of the United States.” 33 days later, I read, “Huckabee signed the Presidential Taxpayer Protection Pledge on March 2nd, 2007 during the Conservative Political Action Conference.”
It seems that political expediency got a hold of you.

A: The reason I ended up signing the pledge, is that I realized that what I was signing was to say that we would not raise marginal tax rates, and frankly, I see no reason or no purpose ever that we
need to raise marginal tax rates in this country.

Q: But, in all candor, you did not modify your position in order to play to the conservative base?

A: It wasn’t a play. It was that I realized that my position had to mature in this area.

Supported Bush tax cuts then; I support them now

Q: What do you say about President Bush’s tax cuts, in the context of McCain’s early votes against but favoring them now?

A: Well, I supported the president’s tax cuts then. I support them now. I think anytime you can cut taxes, it is a good thing.
And I don’t believe that those tax cuts only affected those at the top. But certainly, good tax policy ought to even things out for everybody. It’s the reason I support the
FairTax, which is a whole lot better than just cutting a few taxes here and there and making winners and losers. It’s the reason that a completely new tax approach is really preferable because it empowers everyone in the economy, those from the
top to the bottom. But the people at the bottom actually end up getting the best deal out of the fair tax. So I hope more people will start looking at it and realizing that’s the direction we really need to go.

Raising fees is the same as raising taxes

Q: [to Romney]: In your first year as governor you raised fees on individuals and corporations by more than $500 million.

ROMNEY: We raised fees by $240 million in our state because we had a whole series of fees that hadn’t been raised, in some cases,
in decades, so we brought them up to the cost of providing services. These were not broad-based fees that were required for all people to pay, rather for specialized services.

HUCKABEE: It’s semantics about taxes and fees: if you’re a small business
owner or you pay the fee, it’s as much out of your pocket. You can call it a fee, you can call it a tax, it’s still money the government’s taking from you. It’s the same thing.

ROMNEY: I came in, there was a $3 billion budget gap. Together with the
legislature, we cut spending, we also raised fees, and we calculated how much money we raised in the fees. It was $240 million. We can show you the number.

HUCKABEE: The fees I think you raised were more like half a billion dollars, not $240 million.

AdWatch: Your worth is from God, not your checking account

Huckabee in ad airing in Iowa: I don’t think your value as a human being is found in your checking account. Our founding fathers believed that your worth was something unique because it was given to you by God. And they knew, that these unalienable
rights that we had, came from that creator. That if you worked real hard in this country, you could get somewhere. And if that doesn’t mean anything anymore, than our founding fathers were wrong. I don’t believe so. I think they were right.

Raised some taxes based on court orders and voter approval

Q: The Cato Institute gave you a D and an F for your tenureship as governor--as legitimate criticisms of you for raising taxes and for spending money.

A: Well, I don’t think they’re legitimate criticisms when some of those were either court ordered or
they were voted on by the people and approved by the people for things such as roads. I don’t think they’re legitimate criticisms when you improve education for the children of your state. That’s what being a governor is about. It’s about creating
opportunities for the people of your state.

Q: Even if it means raising taxes?

A: I cut 94 taxes. People forget what we did do on a positive nature: eliminated the marriage penalty, indexed the income tax for inflation so low-income people weren’t
paying high tax rates. So what we tried to do in tax policy by doubling the child care tax credit and by raising the threshold at which people paid, we untaxed a lot of the poor people and gave them a shot at actually making it up the economic ladder.

Gut this incredibly complex and arcane tax code

Voters want somebody who talks about true tax reform like the fair tax. They embrace that idea in
New Hampshire when I talk about it--a complete just gutting of this incredibly complex and arcane tax code we have and replace it with a simple consumption tax that really elevates our economy, gives it a fresh start.

Attacked as tax-and-spend by several anti-tax groups

The conservative Club for Growth ran ads attacking you as a tax-and-spender during your years as governor of Arkansas. One ad said, “Higher sales taxes. Gas taxes. Grocery taxes. Even higher taxes on nursing home beds.” The fact is, you did sign those
tax increases. You did allow a 17% sales tax increase.

A: I have to be a little flattered that the Club for Growth targeted me with $100,000 of ads. But there are nuances of a state government--I’m quite proud of having navigated a ship through trouble
waters in Arkansas.

Q: It’s not just the Club for Growth. The Cato Institute gave you a “D” on taxes for your 10 years as governor. Americans for Tax Reform said that state spending during your first 8 years as governor increased by 65%.

A:
But if you look at our state spending, budgeting during my time as governor increased about 0.5% a year. When you look at the things that I actually had control [over, you would ignore] these wild accusations that I’m a tax and spender.

Tax system penalizes productivity; needs complete overhaul

Q: The FairTax would eliminate the income tax, estate tax, payroll tax and capital gains tax and replace it with a 23% sales tax. Do you support it?

A: I absolutely support the FairTax.
And part of the reason is, the current system is one that penalizes productivity. If we could have the FairTax, you take $10 trillion parked offshore, bring it home, you rebuild the “Made in America” brand, you free up people to earn money, to work,
you don’t penalize them for taking a second job, you don’t penalize them for investing, you don’t penalize them for savings.

Today, our tax system doesn’t need a tap of the hammer, a twist of the screwdriver, it needs a complete overhaul. And what the
FairTax does, it ends the underground economy. No more illegals, no more gamblers, prostitutes, pimps and dope dealers will be able to escape the tax code. It’s the single great thing that will help this country [achieve a] revitalized economy.

Wouldn’t propose new taxes, but won’t pledge against taxes

Q: If need be, because of the war in Iraq, because of the deficit, because of health care, because of infrastructure, would you keep raising federal taxes on the table?

A: I don’t think taxes is really where we need to go.
It’s not that our taxes are too low, it’s that our spending is too high. I think that the real issue is getting our spending under control, making our priorities where they work for the American people.

Q: So “read my lips, no new taxes”?

A: I wouldn’t propose any new taxes. I wouldn’t support any. But if we’re in a situation where we are in a different level of war, where there is no other option,
I think that it’s a very dangerous position to make pledges that are outside the most important pledge you make, and that is the oath you take to uphold the Constitution and protect the people of the United States.

Illustrated hypocrisy with “Tax Me More Fund”

I responded to those who thought the time was right to raise taxes. I announced that I had established a fund for those who felt they were not paying enough in taxes. I created the Tax Me More Fund.

Arkansas citizens who felt they were not contributing
enough of their personal or business income could write checks and the state would be more than happy to receive their contributions.

I carried envelopes for the Tax Me More Fund. I must have carried them to dozens of speeches and yet not one time did
anyone ask for an envelope. From 2001 to 2005, a total of 56 people made contributions to the Tax Me More Fund totaling $2,077. It was a potent way of pointing out the hypocrisy of the insincere vocal minority who proved by their failure to write a check
that they wanted more taxes to be paid, but they wanted them to be paid by someone other than themselves. In Dec. 2001, the Americans for Tax Reform named me as a Friend of the Taxpayer for exposing the phoniness of the more tax arguments.

We ought to un-tax innovation, un-tax income

If we un-tax the possibilities of the innovations in technologies, put an incentive out there that’s just truly something dramatic: a billion-dollar bonus for the first person who can produce a car that can get 100 miles per gallon. We ought to un-tax
innovation, un-tax income. Any time you penalize productivity, it’s counterintuitive to an economy. One of the reasons that we’re dependent is because we have allowed the oil companies to dictate not just prices, but policy. We’re not going to allow
dictators, whether in the Middle East or Venezuela, to continue to in essence enslave the American people, which is exactly what we’ve done. We’re paying for both sides of the war on terror. We pay for it with our tax dollars to fund the military, but
every time we swipe our credit card in the gas pump, we might as well be sending a check over to the madrassas that are training the terrorists that eventually are going to come back to us. That’s why it’s got to be an urgent matter of utmost priority.

Remove the poorest taxpayers from the tax rolls

When we cut the tax burden for Arkansas families, we eliminated 40,000 families from the tax rolls. Not the richest but the poorest were eliminated from the tax rolls.
By indexing for inflation and cutting out the marriage penalty, we gave Arkansans the best boost they have ever had.

Source: 2001 State of the State address to the Arkansas legislature
, Jan 9, 2001

Remove sales tax on food; it's regressive

Our tax policies should be fair to those who work hard for their paychecks. Ultimately, we need comprehensive tax reform, touching all aspects of how we take money from our citizens.
Such an approach should ensure that from income tax to property tax every Arkansan is treated the same without respect to place, race or face. One place we can and must start is a responsible, reasonable removal of the sales tax on food.
This extremely regressive tax, hitting the lowest-paid working families the hardest, can be eliminated without threatening the future of our children's education,
service to our elderly or to the disabled and without adding unfunded mandates on retailers or threatening city and county budgets.

Mike Huckabee on Arkansas Taxation

In AR, eliminated marriage penalty & bracket creep

In all my political life, the one thing I had not been accused of--and folks had called me all sorts of things--was being a "liberal" or a "big-government conservative" [but the Club For Growth was labeling me that].
We tried to get out the facts through emails and our website and interviews. In fact, it feels worthwhile to publish a short list of accomplishments here. During my tenure as governor we:

Net change as governor: same income tax; 1› more sales tax

Q: Mitt Romney said about you, “Time and again, he was asked, Didn’t you raise taxes more than you cut them? And after many attempts, he finally admitted that, in fact, he had raised taxes $500 million more than he cut them.” Do you want to respond?

A:
I turned a $200 million deficit into an $850 million surplus. We built roads. We improved our schools. With the support of the business community, as well as with the Supreme Court order, meant that what I did was exactly what governors are supposed to
do, and that’s govern. You know, Ronald Reagan, today, would be attacked by Romney, because Reagan raised taxes $1 billion his first year as governor of California.

Q: He says you raised taxes $500 million more than you cut taxes. On that narrow point,
is he right?

A: Well, only if you understand that some of those were gasoline taxes. At the end of my governorship, the income tax was exactly the same, and the sales tax was a penny higher. The net result was we had a better base of overall revenue.

Source: FOX News Sunday tag
, Jan 13, 2008

Raised AR net tax burden by $500M to comply with court order

HUCKABEE: There had never been a broad-based tax cut in the 160-year history of my state, &
I signed the first one. I cut taxes 94 times. We eliminated the marriage penalty. We doubled the child tax care credit. We indexed the income tax for inflation.
We froze property taxes for seniors so they didn’t lose their homes due to increases in property taxes.

ROMNEY: Facts are different things. Net-net, didn’t you raise taxes in your state by half a billion dollars?

HUCKABEE: By a court order that said
we had to improve education. Maybe you don’t have to obey the court in Massachusetts. I did in Arkansas. And you know something? Education is a good thing for kids, because kids like me wouldn’t be sitting here if it weren’t for [public education].

FactCheck: 90 cuts + 23 tax increases: net $505M increase

In a TV ad which began running in Iowa on Dec. 28, Mike Huckabee talks of God, the nation’s founders and the innate worth of each citizen. Graphics flash up giving Huckabee credit for bringing down taxes while governor of Arkansas.
We find this claim to be misleading.

The ad shows a graphic asserting that Huckabee “cut taxes over 90 times” as governor. 90 tax cuts indeed were enacted under Huckabee; however, so were 21 tax increases, and they far outweighed the cuts.
The total net tax increase under Huckabee was an estimated $505.1 million. Not surprisingly, anti-tax groups give Huckabee poor marks, and the anti-tax group Club For Growth has even been running TV ads against Huckabee on this topic.

Huckabee’s ad also boasts that he “balanced the budget every year” he was governor, but that’s not much to crow about. Like other governors, he must balance the state budget by law.

AdWatch: Signed first-ever broad-based tax cut in Arkansas

Huckabee TV ad: In 160 years in Arkansas we’d never really had a broad-based, widespread tax cut. I was able to sign the first ever. The economic policies that we did in my state, cutting taxes, streamlining government, resulted in the largest
number of job creations. I cut taxes over 90 times, balanced the budget every year I was governor. Left a surplus of nearly a billion dollars, and did it in the face of an overwhelmingly Democratic legislature. That’s a pretty good record.

FactCheck: Passed broad-based tax cut, but not “first ever”

In an ad titled “Taxes,” Huckabee boasts, “In 160 years in Arkansas we’d never really had a broad-based, widespread tax cut. I was able to sign the first ever.” It’s true that in 1997, Huckabee championed an income tax reduction that saved
Arkansas taxpayers $90.6 million the first year it was in effect. That surely qualifies as a broad-based, widespread cut. It’s less clear, however, whether that is the first one in 160 years.
In 1991, then-Gov. Bill Clinton signed into law a bill that cut income taxes for some of Arkansas’ poorest working families and removed many others from the income tax rolls entirely. “Broad-based”
and “widespread” can be a matter of interpretation, but to our ears, Huckabee’s claim to have authored the first such bill in 160 years is exaggerated.

First governor in Arkansas history to ever lower taxes

I was the first governor in the history of my state to ever lower taxes. We lowered a total of 94 different taxes and fees. We did things that streamlined and made government more efficient. But we were under a Supreme Court order to raise revenue for
our schools. We did it, but with the insistence that we wouldn’t just raise money, we would raise standards and expectations.

Did we raise taxes on fuel? Yes, but 80% of the people voted on improving what was the worst road system in the country.

Raised Arkansas taxes 5 times, but lowered taxes 94 times

Q: The Cato Institute analyzed your performance, and said: “Huckabee receives an F for his current term and a D for his entire tenure. The main reason for the drop was his insistence on raising taxes at almost every turn throughout his final term.” And
The Club for Growth wrote: “Huckabee raised taxes five times-a gas tax increase in 1999, the cigarette tax hike, tax increases in 2004, a tax on beer and a tax on nursing homes.” That’s a tough record to sell to a Republican audience in primary states.

Mike Huckabee on FairTax

FairTax is better than punishing productivity

If we got rid of all the taxes on our work, got rid of the taxes on our savings, investments, capital gains, and inheritance, and made a zero tax, we'd pay at the point of consumption. Why should we punish people for their productivity?
The FairTax doesn't punish people for doing well and building the economy. Give a person his whole paycheck because every American would no longer have a payroll tax taken out.

Source: Fox Business/WSJ Second Tier debate
, Nov 10, 2015

FairTax gets rid of IRS and sifts power back to the states

Q: Will you abolish or cut the size of the EPA, the IRS, the Department of Education?

HUCKABEE: There are a lot of things happening at the federal level that are absolutely beyond the jurisdiction of the Constitution. This is power that should be
shifted back to the states, whether it's the EPA or the Department of Education. We can get rid of the Internal Revenue Service if we would pass the FairTax, and move power back where the founders believed it should have been all along.

FairTax broadens tax base to include non-wage-earners

Q: You say that changing entitlements would be breaking a promise to the American people, and you say that you can keep those programs, save Social Security, save Medicare, without major reforms through a FairTax, which is a broad tax on consumption.
How that would work?

HUCKABEE: One of the reasons that Social Security is in so much trouble is that the only funding stream comes from people who get a wage.
The people who get wages is declining dramatically. Most of the income in this country is made by people at the top who get dividends and capital gains. The FairTax transforms the process by which we fund Social Security and Medicare because the
money paid in consumption is paid by everybody, including illegals, prostitutes, pimps, drug dealers, all the people that are freeloading off the system now. That's why it ought to be a transformed system.

Bottom 1/3 of economy benefits most from the FairTax

Q: Critics of your FairTax proposal say the problem with that is it's too regressive. The average rate for the lowest income group would exceed 33%, while the average for the top group would fall to less than 16%. The rich are going to end up making out
pretty well under this.

A: They have it exactly wrong. In fact, it's the bottom third of the economy who benefit the most from the FairTax. The people of the top third of the economy benefit the least, although everybody benefits some.
That tax study is one that has been discredited by the people who spend over $20 million, very thorough, thoughtful economic study developing the fair tax. The difference is that the FairTaxhas what's called the pre-bate, which untaxes people for their
necessities. So, if you're at the bottom 1/3, chances are you really don't pay any effective tax whatsoever in the consumption tax because you are consuming less & you're getting a pre-bate, which is a rebate in advance for that what you would have spent

Replace IRS & income tax with national sales tax

Huckabee would eliminate the income tax and the IRS, replacing it with national sales tax

Huckabee proposes a national "Fair Tax." The idea would eliminate income, corporate, capital gains and a
number of other taxes and replace them with a single sales tax. He would also eliminate the IRS, arguing the simple system would make it unnecessary.

Source: PBS News Hour "2016 Candidate Stands" series
, May 5, 2015

FactCheck: To be revenue-neutral, FairTax raises some taxes

In a lengthy exchange, Huckabee praised the FairTax, saying: “For each third of the economy, there is a benefit, about a 14% benefit for those at the bottom; those in the middle, about a 7%; even those at the very top end of the economy end up with about
a 5% benefit.”

Huckabee’s claim that everyone will pay less is a fantasy. The FairTax claims to be revenue neutral. That means that it has to collect the same $2.4 trillion that the current system collects. And remember that the
FairTax replaces corporate income and payroll taxes. That means that individuals have to pony up to replace those in addition to replacing the sums collected via personal income and payroll taxes.

So Huckabee is suggesting that the
FairTax will generate exactly the same revenue while collecting nothing from corporations and still costing everyone less than they are currently paying. We certainly hope Huckabee has a barrel of magic pixie dust buried somewhere.

FactCheck: FairTax does not bring underground into economy

Huckabee said about the FairTax, “Everybody gets in the economy--no more underground economy. Drug dealers, prostitutes, pimps, gamblers, non-Republicans--all of those people out there will be paying taxes. Nobody’s working under the table.”

Huckabee’s suggestion that the FairTax will end the underground economy is highly unlikely. It’s true that pimps and drug dealers will now be taxed when they spend their earnings. But will they really charge johns and junkies sales tax on their purchases
It’s a better deal for the person buying the sex or drugs, and a worse deal for the person selling it.

In fact, far from ending the underground economy, there is a real possibility that the FairTax will feed it growth hormones.
There would probably be two prices--one you can pay with a check or credit card that includes the FairTax and one you can pay in cash & save 23%. Because there would no longer be any audits of income, tracing such tax evasion would be extremely difficult

FairTax will tax the average American much less

Q: How does that help the 93 percent of Americans who are paying 15% or less right now?

A: They’re not paying 15 percent; that’s in their visible tax in the terms of the takeout from their checks. When you include the built-in tax, the embedded tax
in the products we buy that corporations build in, the average American is paying 33% in his or her taxes. It would be a dramatic difference if the taxpayers got to choose the taxes, which they would do under the FairTax.

Source: 2008 GOP debate in Boca Raton Florida
, Jan 24, 2008

FairTax and its prebate untax the poor and the elderly

People would love to see the IRS abolished. The harder you work, the more you earn, the more the IRS and the government wants from you. What the FairTax does is says, we want you to earn; we want you to save and we want you to buy things and sell things
and make a profit. It goes to the common sense of the idea that we should encourage people to work and get something for it. A lot of people have never read the entire FairTax because when I first heard about the FairTax, the consumption tax, quite
frankly it sounds like it would be oppressive and regressive to the poor. The poor come out best of all because of the provision in the FairTax called the prebate in which every American, each month, is given the amount of the FairTax back up to the
level of poverty. Everybody gets it, not just those under the level of poverty. It actually untaxes the poor, untaxes the elderly. It makes sure that we don’t end up paying taxes on groceries and medicine and the basic necessities of life.

Support FairTax with a tax credit for the poor

Over 80 percent of the American people know that the tax code is irreparably broken. I would lead one to a FairTax, and that means that the rich people aren’t going to be made poor, but maybe the poor people could be made rich.
That ought to be the goal of any tax system--not to punish somebody, but to enable somebody so that they can have a part of the American dream. The FairTax does just that.

Source: 2007 Des Moines Register Republican Debate
, Dec 12, 2007

FactCheck: FairTax would not eliminate IRS; just change role

Huckabee claimed he would get rid of the IRS, a disappearing act that isn’t so easy as he makes it sound. Huckabee said, “The first thing that I would get rid of would be the Internal Revenue Service--a $10-billion-a-year industry.
I’m not being facetious. If we enacted the FairTax, we will get rid of the IRS.”

It is true that the FairTax would get rid of the agency that we now call the IRS. But, according to the bill Huckabee supports, the Fairtax would “eliminate” the
IRS by replacing it with a new Sales Tax Bureau, which wouldn’t necessarily be much smaller than the existing IRS.

According to the Bush administration study on the FairTax, “The federal administrative burden for a retail sales tax may be similar to
the burden under the current system.” The FairTax would also require an entirely new type of bureaucracy to “keep track of the personal information that would be necessary to determine the size of the taxpayer’s cash grant.”

FairTax is 23%; Bush’s study missed prebate & other aspects

Q: This would be a sales tax of 23% on almost every good and service you buy or anyone buys. But a bipartisan panel named by President Bush say to raise enough money, the rate would have to be
34%.

A: They didn’t really study the FairTax. They simply studied a type of consumption tax, not the actual proposal that was designed by some of the leading economists in this country. It is a rate of 23%. It’s not 30% or 34%,
as some of the critics complain.

Q: They said that a FairTax would reduce the tax burden on only two groups, those making less than $30,000 a year, because there’s a rebate for people under the poverty line, and those making more than $200,000 a year.
So the rich and the poor do better, but the vast middle class ends up paying more taxes.

A: They had a fatal flaw. They didn’t understand that the “prebate” applies to everybody, including the middle class. Everybody comes off better off.

FairTax untaxes productivity & things which we export

Q: Tell us about your FairTax. You’re going to get rid of the IRS. You’re going to have basically a consumer tax. If you put a tax on spending, won’t that encourage people to hoard their money rather than spend it, and hurt the economy?

HUCKABEE: Nothing’s going to discourage Americans from spending money! No, the FairTax does something that is absolutely phenomenal for the economy. It untaxes productivity. It untaxes those things which we export.

HUNTER: I’m a sponsor of the FairTax.

Source: 2007 Republican debate in Dearborn, Michigan
, Oct 9, 2007

FairTax eliminates all taxes on productivity & saving

Q: You may be the biggest supporter of the FairTax on this stage, that you say replace the income tax with a 23% national sales tax. Now, back in 2005, Pres. Bush’s Tax Reform Commission did a study about the FairTax. They said the sales tax rate would
have to be 34%, not 23%, & that no state, no country, has ever put in a 34% sales tax. The commission says that with a FairTax that high, there are only two income groups that would benefit--those making less than $30,000 a year & those making more than
$200,000.

A: The Bush tax panel did not look at the FairTax proposal. They looked at something that called itself that, but it was not. The true FairTax proposal is the 23%. And it empowers everyone in the economy, not just the people at the bottom
and the very top, but all of the middle class, which is a desperate need. What we would do with the FairTax is to eliminate all the taxes on productivity. You wouldn’t be penalized for saving, earning, for having a capital gain, making an investment.

FairTax puts Going-Out-of-Business sign on IRS

Q: The alternative minimum tax caught 4 million people this year; it’ll get 23 million next year unless Congress acts. How would you eliminate the tax without raising the budget deficit?

A: The simplest way is an active FairTax. That’s the first thing
I’d love to do as president, put a “Going Out of Business” sign on the Internal Revenue Service and stop the $10 billion a year that it costs just for them to operate. A FairTax would eliminate the alternative minimum tax [& many other taxes].

Source: 2007 Republican Debate in South Carolina
, May 15, 2007

FactCheck: FairTax requires 34% sales tax +$600B entitlement

Huckabee praised a “FairTax” without noting that it would actually impose a stiff retail sales tax & ease the tax burden on the richest Americans:

“A FairTax would eliminate the alternative minimum tax, personal income tax, corporate tax, & al
the various taxes that are hidden in our system & Americans don’t realize what they’re paying.”

The FairTax proposes a “prebate” to soften its impact on low-income persons--a monthly check for the amount of tax paid up to the poverty level.
But any sales tax also would lower taxes for those upper-income persons who save large portions of income that would be taxed under current law.

Pres. Bush’s bipartisan Advisory Panel on Tax Reform rejected the idea, saying it would substantially
increase taxes for 80% of taxpayers. The panel calculated that a sales tax would have to be set at 34% of retail prices, and the monthly cash prebate would amount to the largest entitlement program in history, at least $600 billion per year.

Flatter, fairer, finite, family friendly overhaul: Fair Tax

Q: In addition to the Bush tax cut, name a tax you’d like to cut.

A: I cut taxes 94 times as governor, but I realize tinkering with it doesn’t work. I’d overhaul it. I would work for the fair tax, which meets the four criteria:
flatter, fairer, finite, family friendly. We’d get rid of the IRS. We’re get rid of all capital gains, income, corporate. And we’d have a consumption tax. The fair tax proposal, I believe, offers the best opportunity for all levels of Americans.

Supports national flat tax to keep up with globalization

During the 2000 presidential race, Steve Forbes advocated simplification of the tax code and the implementation of a flat tax. While far from perfect, moving toward a tax that is both flatter and fairer is a goal we should adopt.

One of the arguments
for a flat tax is to address a world economy that has radically changed in the last decade. Capital, and even labor, are fluid & mobile. A tax structure that is more predictable, consistent, flatter, and fairer not only represents greater accountability
in government but may well be a key element of economic survival as we continue to play on a global stage. Governments unwilling to respond with lower rates and broader tax bases are tempting fate and could continue to see erosion of investment & jobs.

Some argue that a flat tax is especially oppressive to those at the bottom of the economy because they currently pay little of their income to taxes. Making sure that a tax system is fair means we should not ignore the needs of the poor.

No national sales tax or VAT.

Huckabee adopted the National Governors Association policy:

State tax policy is closely linked to federal policy. 36 states currently use either federal income or federal tax liability as the state tax base for personal income taxes. It is critical that Congress and the administration do not enact tax reform in a vacuum, but in consultation and in partnership with the nation’s Governors.

National Sales or Value-Added Tax The nation’s Governors oppose a national sales or transactional value-added tax. Such taxes would intrude into a tax area that has traditionally been reserved for and relied on by state and local governments. If enacted, either of these taxes would seriously threaten the ability of state and local governments to maintain their tax base.

Current Income Tax If Congress decides to reform the current tax system, they should reduce the complexity of current income taxes; increase incentives to work, save, and invest; and increase efficiency and fairness. As part of any reform of the
current income tax, the nation’s Governors would oppose any modification to the deductibility of state income taxes, property taxes, and the interest on state and local bonds.

Transition If major tax reform is enacted, it should not be implemented for at least three years, to give states ample time to adjust their own tax systems.

Information Needs of the StatesThe ability of states to tax various revenue sources depends to a large extent on information that only the federal government can collect. This is becoming much more important given the complexity of both the international and domestic economies in tracing where goods and income are generated. It is critical that the federal government separate tax reform per se from the information that is collected from individuals, businesses, and corporations with respect to income generated. The data collection role of the federal government must be developed in partnership with state and local governments.

Let states independently determine estate taxes.

Huckabee adopted a letter to Congressional leaders from 37 Governors:

We are writing to request equal treatment between states and the federal government on estate tax changes. Regardless of one’s view about phasing out the federal estate tax, the Governors are absolutely united in opposing any action that would discriminate against states in the phase-out of the state and federal estate taxes. This issue needs to be addressed before the Senate goes to conference with the House.

Governors believe that the ability of states to independently determine their own tax revenue policy is a basic tenet of federalism. Moreover, no federal tax bill should be enacted without close consultation with the states.

At the very least, there must be equity in the treatment of the state death tax credit in the tax bill the Congress considers with the proposed phase-out of the federal estate tax. Governors oppose provisions that impose disproportionate impacts on state revenue systems. The changes proposed by the Senate would have abrupt, significant adverse impacts on state revenues at a particularly onerous time for many states. The potential impact on states would begin next year and have a potential impact of between $50 and $100 billion over the next ten years.

We urge the leaders to respect those rights and to restore fairness.

Source: National Governor's Association letter to Congress 01-NGA19 on May 23, 2001